Bloomberg ranked frontier markets based on the overall investment climate on a projected risk-adjusted return basis through 2015.
The following variables were used for each country: ECONOMIC (40% weight): average annual real GDP growth, 2014-2015 (5%); average annual inflation rate, 2014-2015 (5%); average annual government debt as a percentage of GDP, 2014-2015 (2.5%); change in government debt from 2013 to 2015 (2.5%); average annual total investment as a percentage of GDP, 2014-2015 (5%); average annual current account balance as a percentage of GDP, 2014-2015 (2.5%), change in current account balance from 2013 to 2015 (2.5%); current labor participation rate (5%); current foreign reserves as a percentage of GDP (5%), current World Economic Forum Infrastructure Score (5%). FINANCIAL (40%): current price-to-book ratio of primary equity index (8%); liquidity of primary equity index over previous three years (ratio of turnover to market cap) (8%); exchange rate volatility over previous three years (8%); current two-year sovereign debt CDS spread (8%); current EIU banking risk score (8%). POLITICAL/SOCIAL (20%): current Transparency International Corruption Perceptions Index score (5%); current EIU political risk score (5%); current World Bank Ease of Doing Business score (5%); current adult literacy rate (5%). For each variable, the worst-performing country received zero points while the best-performing country received the maximum number of points assigned to that variable. All other countries received points on a percentile basis between these two extremes. Points for all variables were summed into a total score, with the range being 0-100. All data were latest available as of January 6, 2014. GDP, inflation and current account data forecasts were provided by Bloomberg, except for Morocco, whose figures were sourced from the IMF.
Bloomberg, International Monetary Fund, Economist Intelligence Unit, Transparency International, World Bank, World Economic Forum
January 6, 2014